PROJECT INFORMATION DOCUMENT (PID)
APPRAISAL STAGE
Project Name
Region
Sector
Project ID
Borrower(s)
Implementing Agency
Environment Category
Date PID Prepared
Estimated Date of
Appraisal Authorization
Estimated Date of Board
Approval
Report No.: AB1002
Knowledge Economy and Innovation Project (KEIP)
EUROPE AND CENTRAL ASIA
General industry and trade sector (45%); general education sector
(20%); general information and communications sector
(20%);telecommunications (10%); general public administration
sector (5%)
P083985
GOVT. OF TURKEY
State Planning Organization (SPO), Turkish Technology
Development Foundation (TTGV), State Institute of Statistics
(SIS), Turkish Confederation of Employer Associations (TISK)
[ ] A [X ] B [] C [ ] FI [ ] TBD (to be determined)
June 29, 2004
September 1, 2004
December 23, 2004
1. Country and Sector Background
1.
Turkey’s capacity to acquire, develop, share and apply knowledge has become a key
factor in determining the country’s ability to compete regionally and globally and to secure highwage, high-value-adding jobs for a rapidly growing young population. Turkey’s development
towards a competitive, knowledge-based economy critically depends on the ability of
enterprises, both large holdings as well as the small and medium enterprises (SMEs), to innovate
by bringing together researchers and entrepreneurs. Innovation-based growth also depends on
the availability of a well educated labor force supported by modern education systems which also
provide for lifelong learning opportunities. The ability to acquire and share knowledge and to
network across the economy also requires access and the skills to use information and
communications technologies (ICT).
2.
Yet on all four accounts - competitiveness, innovation, education and ICT - Turkey still
has far to go, as was pointed out by a recent Knowledge Economy Assessment undertaken by the
World Bank as well as by studies carried out by other institutions such as the World Economy
Forum (WEF), the European Union (EU) or the OECD. For instance, with regard to
competitiveness (according to the WEF) Turkey ranks 69th, behind all of the new members of the
EU and candidate countries. Patenting (as an indicator of innovation output) remains low
compared to the new EU members as well as to other OECD members. With regard to human
capital, one of the greatest constraints to the expansion of a knowledge-based economy in
Turkey is the widely recognized scarcity of individuals with competencies related to advanced
ICT, management, technology, and innovation skills, etc. With respect to ICT and the ereadiness Turkey ranks 50th, again behind all of the new EU and other OECD members (WEF
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and infoDev (2003)). These less than satisfying results are compounded by large regional
discrepancies within Turkey.
3.
Nevertheless some significant progress on individual policy areas, in part supported by
the World Bank, has been achieved over the past decade in Turkey. Basic and secondary
education have been strengthened. Innovation has been supported through the introduction of a
core institutional framework (metrology, basic public funding mechanisms, etc). Turkey has
also developed a vibrant private ICT sector able to compete internationally. Yet policy makers
in Turkey recognize that the progress to date is not enough to keep up with a rapidly evolving
and dynamic external environment. The EU itself is striving to become the “most competitive,
knowledge-based economy” by 2010. Many of Turkey’s competitors (amongst which many are
members of the EU and the OECD) are rapidly gearing up to meet the competitive challenges of
globalization. Cost advantages provided by low wage labor are likely to be eroded over time by
other competitors, such as China. Turkey is (in part) responding to these challenges by preparing
an ambitious e-development program entitled “Turkey e-Transformation Program” aiming to
bring the information society to its citizens over the coming decade.
4.
In moving ahead with such programs, Turkey, however, faces two important obstacles.
Firstly, Government is grappling with the difficulties of integrating innovation, education and
ICT into a single coherent and practical approach to policy and public investments that fosters
the use and application of knowledge on the ground. Secondly, the economy at large is
challenged in bringing together private entrepreneurs, public institutions, and civil society into a
broad, purposeful partnership able to join forces to strengthen Turkey’s competitiveness.
2. Objectives
5.
Moving towards a competitive, knowledge-based economy (that is also more conducive
to integration with the EU) is a long term endeavor that will require considerable institutional
adjustment and change amongst the partners within society in Turkey. Building on achievements
made to date in specific policy areas in Turkey and striving to broaden the foundations for the
future development towards a knowledge-based economy, the proposed project would contribute
to the improvement of the competitiveness of Turkey’s economy by (a) connecting enterprises
with sources of information, knowledge and technology within Turkey and abroad; (b)
facilitating an information society, (c) enhancing human capital to meet the requirements of a
knowledge economy; and (d) supporting an environment in which knowledge-based initiatives
can develop. Some of the activities proposed under this project are likely to be implemented at
the regional or provincial level, where two regions would be selected on the basis of agreed
criteria.
3. Rationale for Bank Involvement
6.
The proposed project is consistent with the new FY01-03 Country Assistance Strategy
(CAS) for the Republic of Turkey (Report No. 26756TU). As stated in the new CAS, Turkey’s
development agenda is centered in part around the following major themes of: (a) sound
macroeconomics and governance; (b) equitable human and social development; and (c) attractive
business climate and knowledge. Support for enterprise innovation under the KEIP contributes to
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fostering an attractive business climate and knowledge environment. The development priorities
mentioned in the CAS also include improvement of public service delivery, which Turkey is
promoting through the so called e-Transformation Turkey Project, a program aiming to foster the
coordination of e-Government activities with the support (amongst others) of the KEIP. The
project also contributes to the broader network area of education by developing skills for the
knowledge economy, which in turn promotes human and social development.
4. Description
Component I: Support to Enterprise Innovation (Implementing agency: Turkish Technology
Development Foundation (TTGV), Total financing: US$52 million)
7.
The activities envisaged under this component will seek to broaden and deepen the
system of technology support for enterprises in Turkey. These activities will help to move the
enterprise technology support system to a position where (i) any enterprise with the potential to
use technology in developing its business competitiveness will be able to access appropriate
support at a level commensurate with its needs, and (ii) that enterprises will be able and are
encouraged to progress up to more advanced technological solutions as their understanding and
need for technology evolves.
8.
The aim of this approach to innovation is to create a coherent, integrated and, ultimately,
self-sustaining technology support system designed to encourage and support larger numbers of
enterprises to increase productivity and competitiveness through adoption and development of
technology. The development of such an integrated system will be a critical element in
stimulating more competitive enterprises. This component aims to make a contribution to
establishing such a system towards innovation.
9.
The component will support (a) the continued development of two important programs
commenced under previous World Bank funded projects and, additionally, it will support (b) the
development of new programs as well as (c) pilot regional delivery arrangements to complement
and build on the existing programs.
10.
The project will complement the existing programs by assisting in the establishment of
decentralized delivery arrangements on a pilot basis in two selected provinces of Turkey to offer
a coordinated package of technology support at the provincial level through Innovation
Coordination Centers (ICC). The aim here is to extend the reach of technology support in each
of the two pilot locations and, in particular, to test decentralized approaches to increasing the
number of enterprises recruited to technology programs. These Centers will also assist
companies to access other forms of public support services provided by a range of institutions
such as Turkish Technology Development Foundation (TTGV), Small and Medium Industry
Development Organization (KOSGEB), Technology Forecasting and Assessment Directorate
(TIDEB) and others (sign posting). As part of the provincial pilots the component will also
support the initial roll-out of a new Small Technical Development Program that will provide
assistance for small technology projects, a service currently not available in Turkey.
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11.
The second set of activities envisaged will ensure that appropriate support mechanisms
are available to address all the critical barriers faced by enterprises in terms of innovation and
technology adoption. TTGV will develop a number of new programs in critical areas where
enterprises currently find it difficult to obtain appropriate support, namely in Finance to Support
Technology Start Ups1, Support for the Commercialization of Technology Projects2 and support
for enterprises in the area of intellectual property rights 3. TTGV will develop a new technology
web portal4 as a source of advice, guidance and materials to assist enterprise in the area of
technology development. The new Small Technology Development Fund mentioned above will
also fill a gap in current provision by making support available to SMEs wishing to undertake
technology projects at a smaller scale than the existing programs can currently address.
12.
This component will also seek to help create a more integrated system of support for
technology driven enterprises which will make it easier for such enterprises to progress up the
technology ladder as their understanding and need for technology evolves. In practice, this will
be addressed by ensuring that the design of the supported programs and the new provincial
Innovation Coordination Centers includes arrangements to make it easier for enterprises to
graduate form one level of support to the next. TTGV intents developing a client management
system to ensure that enterprises enrolled in TTGV programs receive longer-term guidance as
part of their program, including advice on the next stages of technology development. Similarly
the component will help TTGV to widen its relevance to enterprises and by developing
appropriate financial models for the various programs it will contribute to developing TTGV’s
own long term financial sustainability.
Component II: Information Society Development (Implementing agency: State Planning
Organization (SPO), Total financing: US$52 million)
13.
The objective of this component is to support the application of information and
communication technologies (ICT) to (1) improve the delivery of public services to enterprise
and citizens; and (2) to provide strategic ICT training to senior Government officials.
14.
The following activities are envisaged to be carried out under this component: (a) a twophased approach to improve the public service delivery to citizens and businesses through a
common electronic Government Portal, or Gateway. The first phase will design and develop the
framework for online public service delivery, government intranet, and selection of initial
government e-services. The second phase will establish and operate the Gateway. And (b) the
development of training curricula, training of Turkish trainers, and the provision of training
courses to senior civil servants in line with Turkey’s e-Transformation Strategy.
15.
The two major activities proposed under this component support directly the
implementation of “Turkey e-Transformation Project” in key areas of this program recently
launched by the Government. The development of the Government Gateway is integral to the
Government’s aim to deliver improved public services. The Gateway will provide a common
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Providing limited equity finance for technology start-ups with high growth potential.
Support for the commercialization of technologies which have reached prototype stage.
3
Advisory services and technical assistance for enterprises to protect their intellectual property rights.
4
Development of an internet portal to provide a wide range of technology advice and information to enterprises.
2
4
access point for a number of public services and delivery channels to specific governmental
services. The project will fund the design of the Gateway and a few priority ranked Government
e-services to businesses and citizens. The training activity for senior and mid-level managers will
comprise curriculum development designed to fit Turkey’s E-Transformation Strategy, training
of Turkish trainers and the provision of training courses.
Component III: Developing Skills for the Knowledge Economy (Implementing agency:
Turkish Confederation of Employer Associations (TISK), US$19.5 million)
16.
The goal of the component is to introduce approaches aiming at increasing the level of
knowledge economy skills (KES)5 in the workforce in order to increase the productivity and
competitiveness of enterprises. The proposed component has three distinct objectives, namely to:
(a) identify and promote demand for KES services, (b) deliver KES to workers and the
unemployed including first time job entrants, and (c) to monitor and evaluate the impact of KES.
Supporting demand and supply of knowledge economy skills in the private SME sector is based
on several factors, including (a) international comparator data indicating that in general Turkish
enterprises are not investing sufficiently in skills development, (b) the average educational level
of Turkish workers (5.6 years) is low and will impact Turkey’s competitive edge in the global
knowledge economy, (c) a recent European Training Foundation survey of SMEs in Turkey
indicate an increasing awareness of the need to upgrade management and worker skills, (d)
signals from key stakeholders (i.e. TISK, TESK6, NPC7, TOBB8, KOSGEB9) that the demand
and supply of KES needs stimulating; and (e) evidence from ongoing projects that training
service provision to SMEs is weak. In summary, this component responds to evidence of market
failures in the KES sector, in a manner similar to that initiated in other countries (i.e., France,
Malaysia, Chile). Finally, the emphasis is being placed on “in-service” training for workers, as
opposed to initial training of youth, because of the major ongoing and potential future
investments in the initial education system by Ministry of National Education (MONE) and the
Council of Higher Education (YOK).
17.
To identify and promote the demand for knowledge economy skills the following
activities would be undertaken: (a) defining and identifying relevant and emerging KE skills
eligible for support through a review of the international experience and the national market; (b)
developing guidelines for types of services to be financed (including identification of costs
eligible for reimbursement, eligible clients and service providers, criteria for evaluating
proposals from service providers, contracting procedures and related performance criteria); (c)
undertaking a public information campaign to promote demand (i.e. from civil servants, workers
in enterprises, entrepreneurs, and recent secondary and higher education graduates) and stimulate
supply (i.e. public and private training service providers); and (d) creating a management
information system to manage contracting and payment of service providers; and to train the
5
KES skills include basic and advanced ICT skills, entrepreneurship and management skills, technology skills,
innovation and creative skills.
6
Confederation of Turkish Tradesman and Craftsman
7
National Productivity Center
8
Union of Chambers of Commerce, Industry, Maritime, Trade and Commodity Exchanges of Turkey
9
Small and Medium Industry Development Organization
5
selected provincial contracting agencies in how to publicize, contract, administer, and monitor
supply of KE services at the local level.
18.
To deliver knowledge economy skills to workers in enterprises, to entrepreneurs, and to
recent graduates of secondary and higher education institutions, the following specific activities
would be implemented under this component: (i) advertising the availability of KE skill
development funds to both potential KES training participants and service providers (including
holding briefing meetings to inform the demand side of what is available, and the supply side
about how to submit proposals); (ii) having service providers identify and respond to demand
and submit proposals on an ongoing basis to the contracting agency, which would evaluate and
execute contracts with service providers for proposals that meet clearly specified minimum
criteria as defined in a Field Implementation Manual agreed with the World Bank; and (iii)
disbursing funds to contracted service providers at an agreed unit cost based on actual delivery of
services and according to agreed performance criteria.
19.
To carry out quality assurance, monitoring, evaluation, and scale-up design the following
activities would be undertaken: (a) service providers will be required to include agreed
performance criteria in contracts and to provide entry and exit information on program
participants; (b) on site-supervision of all service delivery sites will take place at least once
during each contract; (c) an independent third party follow-up study and/or tracer studies of
samples of clients will be implemented to assess the impact of the provided skills with respect to
enterprise productivity and competitiveness, entrepreneurial behavior, innovation uptake, worker
productivity and earnings; and (d) cost-effective and sustainable models for “scale-up” of the
above activities to the national level will be developed (based on service provider reporting,
tracer studies, and tracer studies completed by the independent third party evaluation).
Component IV: Strengthening the Knowledge Economy Environment (Implementing
agencies: State Planning Organization (SPO), State Institute of Statistics (SIS), Total financing:
US$6.5 million)
20.
This component consists of four types of activities: 1) undertake monitoring and
evaluation (M&E) activities for the overall project; 2) collect KE and Innovation indicators
compatible with EU standards and provide quantitative information for an annual white paper; 3)
publish an annual KE and Innovation white paper; and 4) raise awareness of KE issues and
opportunities for Turkey.
21.
M&E indicators for the project will be collected through one of the following
mechanisms: a) utilizing existing SIS data; b) administrative processes (within the project
activities or more broadly within the existing Turkish government - line ministry - activities); c)
special surveys to collect regional level data (e.g. to collect ICT indicators that are not yet
available from the SIS at the regional level); or d) independent impact evaluation surveys.
22.
Preparation of the annual KE white paper involves the following activities a) determine
the framework of the white paper; b) gather quantitative and qualitative information; and c) draft,
publish, and disseminate the white paper. The SPO will be the lead agency in determining the
content of the white paper, in consultation with other stakeholders. The SIS, with cooperation
from other stakeholders, will be the lead agency to provide quantitative information for the
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paper. The actual drafting of the white paper will either be done within the SPO or by
outsourcing it to other Turkish institutions such as the Scientific and Technical Research Council
of Turkey (TUBITAK) or universities.
5. Financing
Source:
(Million
USD)
BORROWER
30
INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT
100
Total
130
6. Implementation
23.
A Steering Committee will provide coordination amongst the institutions and partners
involved in the implementation of this project and also provide guidance and ensure continued
relevance of this project within the broader economic policy framework of the Government.
Senior level officials of all institutions directly involved in the implementation of this project
would be represented on this Steering Committee chaired by the SPO.
24.
Project Coordination and Implementation Unit (PCIU) will undertake
implementation, and undertake project management and day-to-day administration across all
four project components (including procurement, financial management, etc.). The PCIU would
be formally under the responsibility of the SPO, however, actual execution of its functions would
be outsourced to TTGV on the basis of a protocol (or the like) between SPO and TTGV. In
addition, the PCIU will serve as secretariat to the Steering Committee.
7. Sustainability
25.
General interest on Knowledge Economy (KE) and competitiveness issues as well as on
how to convert KE concepts into public investment activities such as those envisaged under this
project is strong on the part of the Government, private sector, academia and NGOs. There is
also significant interest in ensuring complementarities between activities and approaches
envisaged under this project and policies associated with the European Union in the KE field
(e.g. European innovation policy, information society, life long learning, etc).
26.
The World Bank’s past experience with technology operations in Turkey, the Industrial
Technology Project being the most recent one, indicate that especially the private sector has
significant technical and managerial potential to successfully complete technology related
projects. The expansion of existing and new SME/technology operations that will be financed
through KEIP have a high likelihood of sustainability because of the complementarities
envisaged by supporting such enterprises both through improved technology and improved labor
skills.
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27.
The e-Government activities supported under the KEIP are likely to be sustainable as
they constitute critical building blocks for the Government’s e-Transformation Turkey Project.
They form an integral part of the Government’s short-term action plan for e-Government
development and are likely to be scaled-up through various e-applications introduced over and
above of the KEIP implementation. Finally, the selected implementing agencies, SPO, TTGV,
TISK and the SIS are all established institutions who have been involved in Bank’s operations
with success in the past. Therefore, the impacts of the KEIP are likely to grow to be more
effective in future in planning and implementing more complex KE projects, to the benefit of the
overall Turkish society and competitiveness of the country.
8. Lessons Learned from Past Operations in the Country/Sector
28.
The recent Knowledge Economy Assessment Study of Turkey suggests that activities
leading to the development of a knowledge-based economy should strive to improve the
performance and to move towards increased integration of Turkey’s innovation support systems,
human capital base, and the breadth and scope of its information society capacity.
29.
Lessons learned from previous skill development projects. The World Bank has been
involved in a number of education, training and employment projects over the past 15 years in
Turkey. Several of these have worked directly with adult continuing education and training,
including SME support and development (i.e. the Non-formal Education Industrial Training
Project, Employment and Training Project, and current Privatization Social Support Project.)
Evaluations of these projects point out the need for bringing supply and demand together,
especially at the local level, and the use of performance-based contracts between these two
stakeholders, as being a very important factor in assuring quality and relevance of the services to
be delivered. The design of KEIP builds on this experience, where Components I and III will
work synergistically, i.e. Component I will support raising the demand for skilled labor and
Component III will contribute to supplying the required knowledge economy skills to the market.
9. Safeguard Policies (including public consultation)
Safeguard Policies Triggered by the Project
Environmental Assessment (OP/BP/GP 4.01)
Natural Habitats (OP/BP 4.04)
Pest Management (OP 4.09)
Cultural Property (OPN 11.03, being revised as OP 4.11)
Involuntary Resettlement (OP/BP 4.12)
Indigenous Peoples (OD 4.20, being revised as OP 4.10)
Forests (OP/BP 4.36)
Safety of Dams (OP/BP 4.37)
Projects in Disputed Areas (OP/BP/GP 7.60)*
Projects on International Waterways (OP/BP/GP 7.50)
Yes
[X]
[]
[]
[]
[]
[]
[]
[]
[]
[]
No
[]
[X]
[X]
[X]
[X]
[X]
[X]
[X]
[X]
[X]
*
By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas
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10. List of Factual Technical Documents
1) Turkey Knowledge Economy Assessment Study, May 2004, Private and Financial Sector
Unit, Europe and Central Asia Region (ECSPF), World Bank
2) e-Transformation Turkey Project, Information Society Department, State Planning
Organization, http://www.bilgitoplumu.gov.tr/eng/default.asp
11. Contact point
Contact
Title
Tel
Fax
Email
: Severin L. Kodderitzsch
: Lead Operations Officer
: (202) 458-2164
: (202) 522-3687
: Skodderitzsch@worldbank.org
12. For more information contact :
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-5454
Fax: (202) 522-1500
Web: http://www.worldbank.org/infoshop
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